Financial statements

The financial statements cover the Adult, Community and Further Education Board (the board) as a statutory authority/individual reporting entity under the Education and Training Reform Act 2006. The board reports separately to Parliament through the Minister for Skills and TAFE.
The board’s principal address is:

Adult, Community and Further Education Board
Level 37, 121 Exhibition Street
Melbourne VIC 3000

A description of the nature of the board’s operations and its principal activities is included in the report of operations, which does not form part of these financial statements.

Basis of preparation

These financial statements are Tier 2 general purpose financial statements prepared in accordance with AASB 1060 ‘General Purpose Financial Statements – Simplified Disclosures for For-Profit and Not-for-Profit Tier 2 Entities’ (AASB 1060) and Financial Reporting Direction 101 ‘Application of Tiers of Australian Accounting Standards’ (FRD 101).

The board is a Tier 2 entity in accordance with FRD 101. These financial statements are the first general purpose financial statements prepared in accordance with Australian Accounting Standards – Simplified Disclosures. The board’s prior year financial statements were general purpose financial statements prepared in accordance with Australian Accounting Standards (Tier 1). As the board is not a ‘significant entity’ as defined in FRD 101, it was required to change from Tier 1 to Tier 2 reporting effective from 1 July 2024.

These financial statements are in Australian dollars and the historical cost convention is used unless a different measurement basis is specifically disclosed in the notes to the financial statements.

The accrual basis of accounting has been applied in the preparation of these financial statements whereby transactions are recognised in the reporting period to which they relate, regardless of when cash is received or paid.

Transactions are recognised net of GST unless the GST is not recoverable. In this case, it is recognised as part of the cost of acquisition of the asset or as part of the expense.

Judgements, estimates and assumptions are required to be made about the carrying values of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on professional judgements derived from historical experience and various other factors that are believed to be reasonable under the circumstances. Actual results may differ from these estimates.

Revisions to accounting estimates are recognised in the period in which the estimate is revised and also in future periods affected by the revision. Judgements and assumptions made by management in the application of Australian Accounting Standards (AASs) that have significant effects on the financial statements and estimates are disclosed in the notes to the financial statements where applicable.

Amounts in the financial statements have been rounded to the nearest 1,000 dollars unless otherwise stated. Figures in the financial statements may not equate due to rounding.

Compliance information

These general purpose financial statements have been prepared in accordance with the Financial Management Act 1994, applicable Financial Reporting Directions (FRDs) and applicable AASs, which include interpretations, issued by the Australian Accounting Standards Board (AASB).

Where appropriate, those AAS paragraphs applicable to not-for-profit entities have been applied. Accounting policies selected and applied in these financial statements ensure that the resulting financial information satisfies the concepts of relevance and reliability, thereby ensuring that the substance of the underlying transactions or other events is reported.

The board’s overall objective is to support the expansion of adult community education across all learner groups, qualification levels and industry sectors, and to develop a strong Learn Local provider base that is responsive to industry and community needs.

The board is predominantly funded by accrual-based grants from parliamentary appropriation and services provided free of charge by the Department of Jobs, Skills, Industry and Regions (the department).

2.1 Income from transactions

Income is recognised to the extent that it is probable that the economic benefits will flow to the entity and the income can be reliably measured.

Grants

State government grants, received by the board during a reporting period, are recognised as income of that reporting period consistent with AASB 1058 ‘Income of Not-for-Profit Entities’. Income from grants without sufficiently specific performance obligations are recognised when the board has an unconditional right to receive cash that coincides with the receipt of grant funding from the department.

Services received free of charge

Contributions of services received free of charge are recognised at fair value when control is obtained over them, irrespective of whether these contributions are subject to restrictions or conditions over their use. In accordance with AASB 1058 ‘Income of Not-for-Profit Entities’, income in the form of services is only recognised when a fair value can be reliably determined, and the services would have been purchased if they had not been received as a donation.

The fair value of services received free of charge is measured based on management’s judgement in allocating the estimated time incurred by departmental staff in supporting the board, and includes relevant employee benefits (including on-costs), contractor support and other operating costs.

This section discloses the costs incurred by the board in supporting its operations.

3.1 Expenses incurred in board operations

Operating expenses

Operating expenses generally represent the day-to-day running costs incurred in the normal board operations. These items are recognised as an expense in the reporting period in which they are incurred.

Services provided free of charge

Contributions of resources provided free of charge are recognised at their fair value after control is obtained over them, irrespective of whether restrictions or conditions are imposed over their use. Contributions in the form of services are only recognised when a fair value can be reliably determined, and the services would have been purchased if they had not been donated.

The fair value of services provided free of charge equals the services received free of charge from the relevant portfolio department in supporting the operation of the board.

3.2 Grants and transfer payments

Grants and other transfers to third parties (other than contributions to owners) are recognised as an expense in the reporting period in which they are paid or payable. They include transactions such as grants, subsidies and other transfer payments to educational providers.

Grants can be paid as general purpose grants, which refer to grants that are not subject to conditions regarding their use. Alternatively, they may be paid as specific purpose grants, which are paid for a particular purpose and/or have conditions attached regarding their use.

This section sets out the assets and liabilities that arise from the board’s controlled operations.

4.1 Receivables

Receivables consist of:

• contractual receivables, such as debtors in relation to goods and services, which are recognised at fair value as financial instruments. The receivable is subsequently measured at amortised cost using the effective interest method, less expected credit losses.
• statutory receivables (i.e. amounts owing from the Victorian Government), which are measured at fair value. They are recognised and measured in line with contractual receivables (except for impairment) but are not classified as financial instruments for disclosure purposes as the receivable does not arise from a contract.

In accordance to FRD 114 ‘Financial instruments’, all entities shall apply the simplified approach to impairment for receivables, which requires the loss allowance to always be measured at an amount equal to lifetime expected credit losses for all trade receivables, lease receivables and statutory receivables.

4.2 Payables

Payables consist of:

• contractual payables, such as accounts payable and expenditure accruals, which recognise the liability to make future payments for goods and services received/purchased by the board that remain unpaid at the end of the financial year. These payables are classified as financial instruments and categorised as financial liabilities at amortised cost
• statutory payables, such as GST, which are not classified as financial instruments and not included in the category of financial liabilities at amortised cost, because they do not arise from a contract.

4.3 Commitments for expenditure across payment timeframe

Commitments for future expenditure include operating and capital commitments arising from contracts. These commitments are recognised at their nominal value and inclusive of GST payable. Where it is considered appropriate and provides additional relevant information to users, the net present values of significant individual projects are stated. These future expenditures cease to be disclosed as commitments after the related liabilities are recognised in the balance sheet.

It is often necessary for the board to make judgements and estimates associated with recognition and measurement of items in the financial statements. This section sets out information specific to financial instruments, as well as those items that are contingent in nature or require a higher level of judgement to be applied.

5.1 Financial instruments

Measurement basis and accounting policy

The board considers the carrying amount of financial instrument assets and liabilities recorded in the financial statements to be a fair approximation of their fair values, because of the short-term nature of the financial instruments and the expectation that these will be paid in full.

Contractual financial assets

The board applies the AASB 9 ‘Financial Instruments’ simplified approach for all contractual receivables to measure expected credit losses using a lifetime expected loss allowance based on assumptions about the risk of default and expected loss rates. The board has grouped contractual receivables on shared credit risk characteristics, days past due/debtors’ financial health and selected the expected credit loss rate based on past history, existing conditions and forward-looking estimates at the end of the financial year.

Impairment

All financial assets, except for those measured at fair value through profit or loss, are subject to an annual review/assessment of whether there is objective evidence that a financial asset or group of financial assets is impaired. Impaired receivables (expected credit loss) and bad debts not written off by mutual consent are classified as other economic flows in the net result. Bad debts considered as written off through mutual consent are classified as transaction expenses. Subsequent recoveries of amounts previously written off are credited against the same line item.

Net gain/(loss) on financial instruments by category

Note:

(i) The total amounts disclosed above exclude statutory amounts (e.g. amounts owing from Victorian Government and GST input tax credit recoverable and taxes payable).

Note:

(i) The total amounts disclosed above exclude statutory amounts (e.g. amounts owing from Victorian Government and GST input tax credit recoverable and taxes payable).

5.2 Contingent assets and contingent liabilities

Contingent assets and contingent liabilities are possible assets or liabilities that arise from past events whose existence will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the entity. They are not recognised in the balance sheet, but are disclosed by way of a note and, if quantifiable, are measured at nominal value. Contingent assets and liabilities are presented inclusive of GST receivable or payable, respectively. As at 30 June 2025, the board had no knowledge of any contingent assets or contingent liabilities (2024 – Nil).

This section includes additional material disclosures required by accounting standards or otherwise, for the understanding of this financial report.

6.1 Other economic flows included in net result

Net gain/(loss) on financial instruments

Net gain/(loss) on financial instruments includes impairment and reversal of impairment for financial instruments at amortised cost.

6.2 Responsible persons

In accordance with the Ministerial Directions issued by the Minister for Finance under the Financial Management Act 1994, the following disclosures are made regarding responsible persons for the reporting period.

The persons who held the positions of minister and accountable officer on the board are as follows:

Responsible minister

• The Hon Gayle Tierney MP (1 July 2024 – 30 June 2025)

Accountable officer

• Ms Laura Lo Bianco-Smith (1 July 2024 – 30 June 2025)

The following officer acted in the role during the year:

• Mr Simon Lindsay (21 November 2024 – 6 December 2024)

Key management personnel and related parties

Related parties of the board include all key management personnel and their close family members and personal business interests (controlled entities, joint ventures and entities over which they may have significant influence). Other related parties include Victorian Cabinet ministers (including their close family members) and public sector entities that are controlled and consolidated into the whole-of-government consolidated financial statements.

Key management personnel of the board include:

• board members
• Minister for Skills and TAFE in the Parliament of Victoria
• accountable officer.

The compensation detailed below excludes salaries and benefits that the portfolio minister received. The minister’s remuneration and allowances are set by the Parliamentary Salaries and Superannuation Act 1968 and are reported within the state's Annual Financial Report.

6.3 Remuneration of key management personnel

Other than ministers and accountable officers, the number of key management personnel and their total remuneration during the reporting period are shown in the table below. Remuneration comprises employee benefits in all forms of consideration paid, payable or provided by the entity, or on behalf of the entity, in exchange for services rendered.

Remuneration of accountable officer

The accountable officer is an executive officer employed by the portfolio department, with information on remuneration disclosed in the department’s financial statements. The board recognises the indirect cost associated with the accountable officer’s time within the services free of charge recognised in the operating statement.

The board does not directly employee any persons who would meet the definition of an executive officer per FRD 21 ‘Disclosures of Responsible Persons and Executive Officers’ in the financial report.

6.4 Transactions and balances with key management personnel and other related parties

During the reporting period, no responsible person received or was entitled to receive any benefit (other than remuneration disclosed in the financial report) from a contract between the board and that responsible person or a firm or company of which that responsible person is a member or has a substantial interest.

Outside normal citizen-type transactions, there were no related-party transactions that involved key management personnel, their close family members or their personal business interests. No provision has been required, nor any expense recognised, for impairment of receivables from related parties. Other related transactions and loans requiring disclosure under the Standing Directions have been considered, and there are no matters to report.

Significant transactions with government-related entities

During the year, the board had the following significant government-related entity transactions:

• Grant funding was received from the Department of Jobs, Skills, Industry and Regions ($27.1 million).
• The board recognises services received free of charge ($7.5 million) from the Department of Jobs, Skills, Industry and Regions to undertake legislative responsibilities.
• Payments were made to the Department of Families, Fairness and Housing ($0.2 million) for the support of a grants management system. This included costs relating to migrating the grants management system into the Department of Jobs, Skills, Industry and Regions.
• The Victorian Skills Authority was paid $0.7 million to support the board’s 2025 Pre-accredited Learner Survey and Learn Local Awards.
• The TAFE division of Victoria University, Victoria Polytechnic, received $0.2 million for curriculum maintenance and management services.
• Payments were made to the Centre for Adult Education ($0.7 million) and AMES Australia ($1.1 million) for the delivery of educational services.

6.5 Remuneration of auditors

6.6 Subsequent events

On 31 July 2025 the department announced proposed workforce changes under Clause 11 of the Victorian Public Service Enterprise Agreement 2024. The new structure was finalised on 1 October 2025, with resultant changes anticipated to result in a material reduction to the valuation of services provided free of charge. Given the implementation of changes will occur across the financial year, the change in valuation can only be quantified at the conclusion of the 2025–26 financial year.

No other matters or circumstances have arisen since the end of the financial year that significantly affected or may affect the operations, the results of operations or the state of affairs of the board in future financial years.